Bitcoin rollercoaster hits China, challenging supervision

Ling Kang, vice president of BTC China, said the platform's users have more than tripled and daily volume has risen more than five times.

As one of the earliest Bitcoin owners in China, "Chang Jia" said he has 2,000 Bitcoin in hand, but won't sell yet.

"Every day I wake up to find more than 10,000 yuan added to my account and Bitcoin value will continue to rise," he said.

Some economists said Bitcoin has heated up at a time when Chinese people are searching for new investment channels.

"Inflation has made people worry. Investors bought Bitcoin to battle yuan devaluation," said Ding Zhaoyong, professor at Economics School of Jilin University.

"Bitcoin has become a financial derivative now. It's highly risky and uncontrollable," said Ye Tan, a financial commentator.

How to regulate?

Although industry insiders, economists, sociologists and investors have diverging forecasts on Bitcoin's future, they all agree government supervision is what the market needs.

Most Bitcoin transaction platforms have servers overseas, and they are not registered at local industry and commerce administrations.

"If platform operators abscond with the money, there is no way for Bitcoin owners to retrieve their assets, even if they bring the case to court," said Zhu Rong, a Bitcoin investor.

Gao Chaoxin is worried that without supervision, the craze will end up in a situation that everyone in the market loses.

Ling said transparency is the current priority.

"The government could borrow regulations for third party payment platforms, requiring investors to provide real names when buying and selling Bitcoin on registered platforms," Ling said.

Ling added that any transactions involving withdrawal of large sums of real money should be recorded in order to protect investors' rights.

Ding Zhaoyong said it is difficult to find current laws and regulations that can be applied to Bitcoin trading.

"The government may refer to laws about e-commerce to define fraud when disputes occur," Ding said.

Zhang suggests a relevant government department consider Bitcoin as a virtual product and regulate trading activities according to normal contract law.

Virtual currency a bit overpriced for the real world